Arik Ruchim, a director and major owner of Six Flags Entertainment (SIX), recently picked up 200,000 shares. The buy increased his holdings by 1.9 percent, and came to a total cost of just over $4.595 million.
He was joined by another major owner, who also picked up 200,000 shares for the same price. Both of the major owners were buyers in August, with multiple buys each totaling over 1,000,000 shares. Other company executives including the CFO have also been buyers this year.
Overall, company insiders own 1.4 percent of shares, but major holders and institutions own nearly the entire float, with over 99.7 percent of shares.
The theme park chain has shed 47 percent of its value in the past year amid the current economic slowdown. Revenue is currently only down by 5 percent, but could drop further, and earnings are already off by 35 percent.
Action to take: Shares trade at 11 times forward earnings, a low valuation for the company historically. While there’s some sizeable debt, the company has more than enough cash flow to make it through today’s rough times. It’s likely shares will move off their steep losses of the past year in the months ahead.
For traders, the stock has been somewhat rangebound in recent months. The January $30 calls, last going for about $4.25, could deliver mid-double-digit growth on a move to the higher end of that price range, around a share price of $28.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.